Deal to Close Lakewood Hospital Shorts Taxpayers by $278 Million

A key argument for breaking the Cleveland Clinic’s lease on Lakewood Hospital and closing the facility has collapsed – courtesy of the Cleveland Clinic.

Tuesday’s Lakewood Observer broke the story of a Cleveland Clinic document acknowledging, unambiguously, a $278 million liability to the city under a lease which Lakewood council members voted to discard as part of the deal that closed the hospital.

Cleveland Clinic document obtained in legal discovery process

As the story’s author Brain Essi notes, the Clinic document completely disproves arguments that Lakewood Hospital could not have remained open through the lease’s 10 remaining years. Lakewood city law director Kevin Butler’s contrary opinion was, Essi adds, “the most important reason cited by City Council when they authorized Butler to negotiate” an agreement terminating the lease and closing the hospital.

The Observer story has city officials who helped craft and support the hospital deal scrambling, as painfully obvious shortcomings leave voters wondering what motivations lie behind such a bad deal. In four weeks, Lakewood voters can reject the deal that closed the hospital by voting against issue 64.

Essi’s front-page story about the deal presents multiple reasons for a vote against 64. In addition to the $278 million liability, another document discovered during an ongoing lawsuit predicted that closing the city’s hospital would shift 5,000 patient visits to Clinic-owned hospitals, bringing an extra annual profit of $11.5 million for the Cleveland Clinic System.

In comparison, the Clinic paid only $9.6 million to acquire hospital assets and associated benefits, Essi suggests. Citing the city’s own Combined Annual Financial Review, Essi says that “The CAFR was prepared by the State Auditor’s office so the $9.6 million number is not subject to debate.” The report is particularly inconvenient for supporters of the hospital deal, who have claimed that it brings Lakewood more than $100 million in new investment.

Essi’s background compounds the difficulty in defending the controversial hospital closing. A licensed attorney since 1984, Essi has long experience with complex sales and issues of liability. He is also a director of a medical practice. By his own estimate, Essi has spent more than 2,000 hours on the Lakewood Hospital issue on a volunteer basis. Essi is available for interview.

Public opinion is not in city hall’s favor as more and more Lakewood citizens plan to vote against issue 64.